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Economic Freedom of North America. Fred McMahon Director, Centre for Globalization Studies The Fraser institute Presented at Economic Freedom of the World Network Meeting Wroclaw, Poland October 1, 2009. What is the Economic Freedom of North America Index?.
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Economic Freedom of North America Fred McMahon Director, Centre for Globalization Studies The Fraser institute Presented at Economic Freedom of the World Network Meeting Wroclaw, Poland October 1, 2009
What is the Economic Freedom of North America Index? An annual compilation of data representing factors which make a province or state economically free A ranking of all US states and Canadian provinces A preliminary ranking of Mexican states by Nathan Ashby, University of Texas at El Paso Mexico to be integrated into full index in next two editions Only third-party, objective data
Components of the Economic Freedom of North America:Canada and the United States Size of government Takings and discriminatory Taxation Labour market regulation Prepared at both the all-government and sub-national level
Components of the Economic Freedom of North America:Canada and the United States Size of government Takings and discriminatory Taxation Labour market regulation Legal system and property rights
The Evolution of Economic Freedom in Canada and the United States
Economic Freedom at the all-government level Source: The Fraser Institute.
Economic Freedom at the sub-national level Source: The Fraser Institute.
Economic freedom and per capita Income in the Canadian provincesCorrelation=0.94 out of 1.00
Economic freedom and per capita Income in the Mexican statesCorrelation=0.87 out of 1.00
Economic freedom and per capita Income in the US statesCorrelation=0.35 out of 1.00
Economic freedom and per capita Income in the US statesCorrelation=0.61 out of 1.00
Economic Freedom, entrepreneurship,and Economic Growth at theby Russell S. Sobel
Economic Freedom and the US Policy Response: Part 1 by Herb Grubel Monetary policy will likely cause inflation, reducing economic freedom by expropriating private property though price increases. Bailout policies involve changes in existing rules, damaging property rights, the integrity of the legal system, and the legal enforcement of contracts. Other measures, or proposed measures, that will reduce economic freedom include: higher marginal income tax rates, increased regulation of the financial and manufacturing industries, and increased regulation related to the cap-and-trade system.
The fiscal-stimulus package will likely result in unprecedented levels of deficits and interest payments that reduce the amount of credit going to the private sector. Federal spending on infrastructure, social programs, and transfers to the states will increase government consumption and transfers, lead to more regulation and, in some cases, encroach on state responsibilities, damaging the integrity of the legal system. Economic Freedom and the US Policy Response: Part 2Spending policies
Economic Freedom and the US Policy Response: Some numbers • The deficits projected in the budget amount to $6.96 trillion over the 10 years from 2010 to 2019. • Total debt in 2019 will be $15.37 trillion, an increase of 265% since the end of 2008. • The debt is projected increase from 41% or GDP in 2008 to 67.2% of GDP, above the 60% of GDP, which EU members may not exceed to remain in good standing. • The annual deficits are very large: 12.3%, 8.0%, and 5.9% of GDP from 2009 to 2011, respectively. • The level considered unacceptable under the Growth and Stability provision of the European Monetary Union is 3%.
The Impact of Financial and Economic Crises on Economic FreedombyJakob de Haan, Jan-Egbert Sturm, Eelco Zandberg The econometric results for changes in the level of economic freedom are based on observations at 5-year intervals from 1970 to 2005 for regional financial crisis, in particular Norway and Sweden. The results show that following an economic crisis economic freedom scores decline. However, they also suggest that countries that had a banking crisis in the previous period increased their level of economic freedom as they moved into recovery.
Overall Economic freedom Crisis most severe in Sweden Crisis most severe in Norway
Size of Government Crisis most severe in Sweden Crisis most severe in Norway
Legal system and the protection of property rights Crisis most severe in Sweden Crisis most severe in Norway
Sound Money Crisis most severe in Sweden Crisis most severe in Norway
Freedom to trade Crisis most severe in Sweden Crisis most severe in Norway
Regulation Crisis most severe in Sweden Crisis most severe in Norway
The Impact of Financial and Economic Crises on Economic FreedombyJakob de Haan, Jan-Egbert Sturm, Eelco Zandberg • However, the authors warn that, due to the global nature of the current crisis, their results may underestimate the impact of the crisis on economic freedom. • In other words, evidence based on previous crises may not capture the impact of the current crisis fully. • As most countries in the world are in a serious economic downturn at the same time, the authors caution that it will be much harder to get out of this recession than regional recessions.
